Dive Brief:
- Alibaba is buying a 38% stake in Shiji Retail Information Technology for $486 million, Reuters reported.
- The pact is part of a "new retail" strategic cooperation, according to the data company's parent Beijing Shiji Information Technology, and Alibaba and its domestic competitors are trying to leverage big data to restructure the large but lackluster retail market.
- Alibaba has been ramping up its presence in retail, investing more than $10 billion in brick-and-mortar outlets. It is facing increased competition in retail from Tencent Holdings Ltd.
Dive Insight:
With retail competition heating up in China, Alibaba Group is paying $484 million for 38% of big data firm Shiji Retail Information Technology.
The deal underscores the growing sophistication of the Chinese retail market and the importance of data in understanding customers and growing sales. It also shows the increasing significance of Alibaba in brick-and-mortar retail, as well as its established role as the dominant e-commerce company in China.
Beijing Shiji Information Technology, the parent company of Shiji Retail Information Technology, reports that it provides software and data systems to hotel firms, including InterContinental Hotels Group, retailers like Starbucks and entertainment companies.
In its last report, Alibaba beat retail and financial analysts expectations, reporting 61% growth in quarterly revenue last November, according to Footwear News. "We are seeing the early results from our efforts to integrate online and offline with our New Retail strategy, and consumers have benefited from access to high-quality products, improved customer experience and the tremendous convenience of shopping anytime, anywhere," Daniel Zhang, chief executive officer, said at the time.
In a previous deal with Beijing Shiji in 2014, Taobao Software, an Alibaba subsidiary, paid 2.81 billion yuan ($450 million at current rates) for a 15% stake in Beijing Shiji to support its online travel enterprise.
Alibaba has been active on many fronts. Last month it was reported that it was in partnership talks with Kroger with the goal of speeding up the integration of online and offline sales. Sources said Kroger might be interested in Alibaba's Alipay payment app. Alibaba also recently invested $2.8 billion for a 36% stake in Sun Art Retail Group, which has been compared to Walmart, and owns 13 Hema supermarkets.
Alibaba's signature event is Singles Day on Nov. 11 (11-11) and last year saw a record $25 billion in purchases. The company also tested its FashionAI artificial intelligence system, which uses machine learning technology to make recommendations on clothing and style. The system is a touchscreen that allows customers to interact while trying on garments, using information embedded in clothing tags. The screens were installed in 13 stores in China in time for Singles Day.
